INTRODUCTION TO CORPORATE SOCIAL RESPONSIBILITY (CSR)

Presented by
7th MSOP Batch ICSI NIRC- Gurgaon Chapter Team 8 Group Members Sunil Kr Verma Anand Soni Asha Damani

Registration Number 520335761/01/2010 520327570/01/2005 220641127/08/2008

Corporate Social Responsibility (CSR)

Responsibility of the Corporate to pursue certain acts

which can benefits the society. The commitment of business to behave ethically and works towards betterment of local people and contribute positively towards up- liftment of not only the life of employees and their families but also the surroundings and society at large. CSR is the backbone of todays business sustainability.

Concept of CSR
Organizations activities affects various stakeholders such

as customers, suppliers, shareholders, local people, Environment, even next generations also and in return the companies should take responsibility for their deeds and take proactive steps mitigate these issues so that positive image of the companies could be established.

Area of CSR Protection of human rights. Safety at work. Caring for environment. Consumer protection and Sustainable management of scarce natural resources.

CSR-Various points of view Employees point of view Providing health and safety measures, preserving employee rights and Discouraging discrimination at work place at the basis of cast, sex and religion. This will create a healthy relationship in the company which in turn improves the productivity and image.

Customer point of view Commitment to product quality, Fair pricing norms etc.

CSR-Various Point of view

Shareholder Point of view The only social responsibility of business is to create shareholder wealth. Corporate management cannot decide what is in the social interest. The costs of social responsibility which do not increase the value of stock, will be passed on to consumers. Other Stakeholders Point of View: Relationships with suppliers must be based on mutual trust. Belief in fair economic competition. Business can contribute to social reform and honor human rights

Why is CSR important?

CSR is an important business strategy because, wherever

possible, consumers want to buy products from companies they trust; suppliers want to form business partnerships with companies they can rely on; employees want to work for companies they respect; and NGOs, increasingly, want to work together with companies seeking feasible solutions and innovations in areas of common concern. Satisfying each of these stakeholder groups allows companies to maximize their commitment to another important stakeholder grouptheir investors, who benefit most when the needs of these other stakeholder groups are being met.

CSR implementation Framework

Conduct a CSR assessment: Assemble a CSR team Develop a working definition of CSR Identify legal requirements Review corporate documents, processes and activities, and internal capacity Identify and engage key stakeholders Develop CSR commitments: Do a scan of CSR commitments Hold discussions with major stakeholders Create a working group to develop the commitments Prepare a preliminary draft Consult with affected stakeholders

Cont..-CSR Implementation Framework..

Implement CSR Commitments: Develop an integrated CSR decision-making structure Prepare and implement a CSR business plan Set measurable targets and identify performance measures Design and conduct CSR training Establish mechanisms for addressing problematic behaviour Create internal and external communication plans Make commitments public Assure and Report on progress: Measure and assure performance Engage stakeholders Report on performance, internally and externally Engage stakeholders

Cont..-CSR Implementation Framework

Evaluate Performance: Evaluate performance Identify opportunities for improvement

Companies in India follow CSR

Companies which have adopted the CSR in India are:

Tata Group, BHEL, Wipro, Bajaj Auto Ltd., Larsen & Toubro, Sriram Investments, Otis Elevator Co. India, ACC, Asian Paints, Brook Bond, Colgate Palmolive, Escorts, SAIL, ITC, Ashoka Leyland etc. Contribution of these companies towards CSR are: Starting social trusts and adopting Anti pollution measures. Adopting villages and Family planning clinics. Training unemployed youth. Community development activities.

CSR Practices in Tata Steel

For example around 1945 Tata introduced some social welfare measures for its employees and that have since become the legislative norms. On unveiling Tata Steels Corporate Social Responsibility Policy, its Managing Director, Mr. B. Muthuraman, said; Tata Steel believes that the primary purpose of a business is to improve the quality of life of people. Tata Steel will volunteer its resources, to the extent it can reasonably afford, to sustain and improve the quality of life of the people of the areas in which it operates. Tata Steels commitments to its corporate social responsibility (CSR) also finds reflection in its adoption of the Corporate Citizenship Index, Tata Business Excellence Model and the Tata Index for Sustainable Development. Tata Steel spends 5-7 per cent of its profit after tax on several

CSR initiatives. Broadly speaking, the companys CSR initiatives are spread across three core areas - employee welfare, the environment and the welfare of the community at large.

CSR In Companies Bill, 2011

Corporate Social Responsibility (Clause 135) Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall constitute a Corporate Social Responsibility Committee of the Board consisting of three or more directors, out of which at least one director shall be an independent director. The Corporate Social Responsibility Committee shall formulate and recommend to the Board, a Corporate Social Responsibility Policy which shall indicate the activities to be undertaken by the company as specified in Schedule VII (b) recommend the amount of expenditure to be incurred on the activities referred to in clause (a); and The Board of every company referred to in sub-section (1), shall make every endeavor to ensure that the company spends, in every financial year, at least two per cent of the average net profits of the company made during the three immediately preceding financial years, in pursuance of its Corporate Social Responsibility Policy. If the company fails to spend such amount, the Board shall, in its report

CSR : Arguments Against

Restricts the free market goal of profit maximization.
Business is not supposed to handle Social

responsibilities and activities. Its government duty to see. Dilutes the primary aim of doing business. Limits the ability to compete in a global market. Companies are already paying Corporate tax ,then why extra cost on social front.

CSR : Arguments for

Addresses issues by being proactive and taking advance

and apt decisions. Limits future government intervention. Make the positive image of the organization. Minimization of Industrial unrest and opposition from local community for existing business and new business as well. Protects business self interest. Society up-liftment and satisfaction of urgent need for environment protection.

Benefits of CSR
Several benefits of corporate social initiatives on the part of corporate may be and it includes: Increase in sales. Increase in market share. Strengthened brand positioning. Improve corporate image. Increased appeal for customers, employees and investors. Reduced operating cost . Emotional attachment with the company.

Carrolls CSR Pyramid

People-Planet-Profit
Human resources
Work and life balance Other fundamental rights at work Environmental issues Public safety and health (including product safety) Profitability and productivity

Spectrum of CSR
Poor CSR
No employment No concern for indirect effect (land, water, air) Destruction of

Good CSR

Taking care of workers Low dependence on non renewable resources

agricultural land
Not willing to listen to other stakeholders Appropriate of land not being compensated Non compliance of rule of land

High awareness about CSR initiatives

Land compensation Increased monitoring system Environment responsibility

Impact of CSR
Some time back there was a strike in Hero Honda

Plant, Dharuhera. Workers started protest disrupting the companies work and creating chaos at factory gate. The local people have warned them either to vacate the place or go to work. Resultantly the workers returned at work. This is an example of the work, the social responsibility, Hero Honda has carried out in surroundings villages for the local people.

Conclusions
CSR is currently a buzzword. Every Company wants to

talk about this but do not want to extend its hands towards the betterment and progress of the society except a very few which can be counted on fingers. Company earns from the society. Therefore, they should spent some % of their profit on CSR activities. As per our opinion the CSR should be made mandatory and its breach should be a punishable offence. Company Secretaries, a bridge between Company and society, must work towards this noble cause.

We sometimes feel that what we do is just a drop in the ocean, but the ocean would be less because of that missing drop

Thank you